Dynamics of market share in the microfinance industry in Bangladesh
AbstractWe discuss evidence that the microcredit industry in Bangladesh has seen emergence of large variations in the size of the microfinance institutions operating in the market-- on the one hand, there are large national-level MFIs, while on the other hand, small localized MFIs operating only within the confines of a small area. Data from a recent survey of Pathrail union in Tangail district, a seasoned place for microcredit, reveals that within the local market competition is becoming more and more intense over time between established national-level MFIs and newly emerging local-level MFIs for market shares in terms of loan amount as well as borrowed members. Data reveals that there is market segmentation where some borrowers and MFIs opt for a package of low interest rates tied with low amount of loan disbursed and some other borrowers and MFIs settle for a package of high interest rates tied with high amount of loan disbursed. A Tobit regression estimation of member market shares in village micro credit market shows that size of the MFI, years of operation in the village, average loan size, deposit interest rates, loan amount disbursed for unique loan purposes (i.e., housing loan) are key determinants in determining MFI shares of a village microcredit market.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16172.
Date of creation: 10 Jul 2009
Date of revision:
Microcredit; Market Share; Product and Provider Characteristics of Microcredit;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-17 (All new papers)
- NEP-COM-2009-07-17 (Industrial Competition)
- NEP-CWA-2009-07-17 (Central & Western Asia)
- NEP-DEV-2009-07-17 (Development)
- NEP-MFD-2009-07-17 (Microfinance)
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